Sounds like a fairly obvious statement, but it can be quite difficult to do: the first step is to record what you are spending and where. If you don't understand what your costs are and where you have the potential for savings, you won't be able to control them effectivelt

We already buy direct from the manufacturers and are getting the best price available, so the only savings we could make are on packaging and shipping costs. (Unless we pay the staff less than the minimum wage !!!)

We use Royal Mail 2nd class post for most of our UK deliveries, so when a courier firm came to us and said that they would do a tracked service for the same price as standard 2nd class we gave them a try. INR cases for Royal Mail ran at less than 1%, the new courier at just under 5% with terrible customer service. We did not use them for long.

We have a weekly order of mailing bags from a local firm, good quality bags and they have never let us down. Company rep from another firm came to see us and said he would beat any price as they were the manufacturers. Sent us a sample and all looked good. Only downside was we had to order a months supply which we did. When we came to use the bags, they did not seal properly, were easily ripped, and our labels did not stick properly. The bags got sent back.

So in our experience, trying to save a few pounds each month resulted in more work for us as well as unhappy customers. Not really cost effective.

When trying to cut costs, make sure it does not affect your customers.

You forgot staff. Keep good productive staff, let go of the unproductive staff. The ones that take one too many fag breaks, tea breaks, go to the toilet every hour, take an extra five minutes longer for lunch, check their phone for WhatsApp messages, chart away to other staff whilst all stopping their work. No wonder why Amazon keep their warehouse staff in order

I've got to agree Qrate. It is amazing to me (participating in the number for forums and Facegroup groups that I do) how many people do not track their sales and expenses. I control costs by looking at several key metrics:

1. Gross Profit. For me, this is gross revenue minus cost of goods sold minus merchant expenses (eBay, Amazon, Paypal fees, etc). The gross profit percentage goals help me keep a handle on changing merchandise cost as well as fees associated with selling.

2. Shipping Cost - cost of shipping items. This includes actual postage as well as shipping material (packages, envelopes, etc.).

3. Variable costs - this is the shipping cost/revenue plus gross profit expenses. These expenses vary with sales volume so looking at it as a percentage of revenue provides another check on changing fees or cost of goods sold.

4. Overhead - overhead basically comprises any non-variable costs that are left. Generally, this is salaries, non-sales tax, storage rental, equipment maintenance, software, etc. These expenses tend to be there regardless of revenue.

I tend to look at overhead very closely. If I have my overhead under control, increasing sales results in a greater margin as the contribution margin of each sale increases significantly once you have cleared your overhead. Example: